College Savings Plans

529 plans and trust funds are designed to help save for a child’s education.

Financial aid and private loans may be other options.

Retirement vs. education

As a parent or grandparent, you’re probably considering how to balance paying for college while planning for your retirement. Many families use some combination of savings, investments, borrowing, and financial aid (if available).

There are options for financing college, but you can’t borrow for retirement. Wells Fargo Advisors believes saving for retirement should be the higher priority for many investors.

If your employer offers a 401(k) plan, consider putting your savings there first, especially if there is a company match. After that, contribute to your child’s education account.

Save as early as possible

As you can imagine, the sooner you start saving for your child’s or grandchild’s education, the more money you may have later.

One popular way to save is the 529 college savings plan. These are tax-advantaged accounts administered by states and institutions. Parents, grandparents, relatives, and friends can contribute.

Other college savings accounts include custodial accounts in the child’s name and Coverdell Education Savings Accounts.

Please consider the investment objectives, risk, charges and expenses carefully before investing in a 529 savings plan. The official statement, which contains this and other information, can be obtained by calling your Financial Advisor. Read it carefully before you invest.

Establish an educational trust fund

Setting up an educational trust fund designed for your child’s education is also an option. When a grandparent or benefactor establishes an education trust, the terms of the trust can be specified. This can include who controls the money, how it will be used, and for whom the trust benefits.

It’s a good idea for grandparents to involve parents when it comes to helping with college savings. How they choose to save could impact any potential financial aid the child may receive.

Go private

Borrowing from a private lender is yet another option. Banks, credit unions, and other financial institutions provide private loans. Loans may be fixed or variable depending on the lender and the borrower’s credit rating.

Other things to consider when borrowing from a private lender:

Private loans are generally more expensive because they may have higher fees.

If the student takes out the private loan, the student is responsible for repayment.

It’s a balancing act

Planning for retirement, managing your investment portfolio, and funding a college education is a balancing act. The trick is to plan ahead.

We can help you come up with a plan that considers all aspects.

Next steps

Ask us how you can save for both retirement and education.

Start saving for college when your child or grandchild is young.

Even if you don’t think you’ll qualify, apply for financial aid.

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